Course 2: Residential Real Estate Transactions Study Guide

Agency Relationships

The legal and ethical structure governing how a real estate registrant represents a client. Under Ontario's TRESA, agency takes specific forms — seller representation, buyer representation, multiple representation, and designated representation — each with distinct fiduciary duties.

Agreement of Purchase and Sale

The legally binding contract under which a buyer and seller agree to a real estate transaction in Ontario, capturing price, deposit, conditions, irrevocability, and closing terms. The standard residential APS is OREA Form 100.

Buyer Representation Agreement

A written contract between a buyer and a real estate brokerage that establishes the brokerage as the buyer's representative under TRESA. Defines the duration, geographic area, commission, and the duties the brokerage owes the buyer. The standard Ontario form is OREA Form 300.

Caveat Emptor

Latin for 'let the buyer beware': the common-law principle that a buyer of real estate is responsible for inspecting and confirming the property's condition, subject to the seller's narrow duty to disclose latent defects.

Chattels vs Fixtures

Chattels are movable items of personal property (fridge, washer, dryer, microwave) that do not stay with the property unless specifically included in the Agreement of Purchase and Sale. Fixtures are items attached to the land or building that stay with the property by default unless specifically excluded.

Closing Costs (Ontario)

The fees, taxes, and adjustments a buyer pays on top of the purchase price when an Ontario real estate transaction completes. Typically 1.5% to 4% of the price, comprising land transfer tax, legal fees, title insurance, adjustments, and disbursements.

Conditional Offer

An Agreement of Purchase and Sale that includes one or more conditions (financing, inspection, status certificate review) that must be fulfilled or waived within a stated period before the offer becomes binding. The buyer can walk away if a condition fails, with deposit returned.

Land Transfer Tax (Ontario)

A provincial tax payable by the buyer on the closing of any Ontario real estate purchase, calculated as a marginal rate on the purchase price. Toronto purchases also pay a separate Municipal Land Transfer Tax with similar brackets.

Latent Defects

Hidden defects in a property that are not discoverable on a reasonable inspection but that the seller knows or ought to know about. Sellers have a duty to disclose latent defects that make the property dangerous or unfit for habitation, and the duty overrides the default caveat-emptor rule.

Misrepresentation

A false statement of material fact that induces a party to enter into a real estate contract. Under Ontario law, misrepresentation can be innocent, negligent, or fraudulent — and each type carries different remedies.

OREA

The Ontario Real Estate Association: a member-based trade association that publishes the standard transaction forms used in Ontario real estate and advocates for the profession. OREA is not a regulator and no longer delivers pre-registration education.

Patent Defects

Visible flaws in a property that a reasonably prudent buyer would discover on a normal inspection: cracked tiles, peeling paint, broken windows, sagging gutters. Sellers do not have a duty to disclose patent defects under Ontario's caveat emptor rule, though they cannot actively conceal them.

Right of First Refusal

A contractual clause giving a specific party (often a tenant, family member, or condo neighbour) the right to match any bona fide third-party offer to purchase a property before the owner can sell to that third party. Triggered when a bona fide offer is received.

Title Insurance (Ontario)

A one-time premium insurance policy that protects an Ontario property owner and their lender against losses arising from defects in the title, undisclosed encumbrances, fraud, and certain off-title issues. Standard coverage is roughly $300-500 for a typical residential purchase.